Correlation Between Open Lending and Zip Co
Can any of the company-specific risk be diversified away by investing in both Open Lending and Zip Co at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Open Lending and Zip Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Open Lending Corp and Zip Co Limited, you can compare the effects of market volatilities on Open Lending and Zip Co and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Open Lending with a short position of Zip Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Open Lending and Zip Co.
Diversification Opportunities for Open Lending and Zip Co
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Open and Zip is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Open Lending Corp and Zip Co Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zip Co Limited and Open Lending is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Open Lending Corp are associated (or correlated) with Zip Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zip Co Limited has no effect on the direction of Open Lending i.e., Open Lending and Zip Co go up and down completely randomly.
Pair Corralation between Open Lending and Zip Co
Given the investment horizon of 90 days Open Lending is expected to generate 1.11 times less return on investment than Zip Co. In addition to that, Open Lending is 1.13 times more volatile than Zip Co Limited. It trades about 0.18 of its total potential returns per unit of risk. Zip Co Limited is currently generating about 0.22 per unit of volatility. If you would invest 193.00 in Zip Co Limited on August 30, 2024 and sell it today you would earn a total of 37.00 from holding Zip Co Limited or generate 19.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Open Lending Corp vs. Zip Co Limited
Performance |
| Timeline |
| Open Lending Corp |
| Zip Co Limited |
Open Lending and Zip Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Open Lending and Zip Co
The main advantage of trading using opposite Open Lending and Zip Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Open Lending position performs unexpectedly, Zip Co can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Zip Co will offset losses from the drop in Zip Co's long position.| Open Lending vs. EZCORP Inc | Open Lending vs. Orix Corp Ads | Open Lending vs. SLM Corp | Open Lending vs. Navient Corp |
| Zip Co vs. Cosmos Group Holdings | Zip Co vs. Regional Management Corp | Zip Co vs. Enova International | Zip Co vs. Open Lending Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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